812/CBDT. - Income Tax - 812/CBDT

INSTRUCTION NO. 812/CBDT Dated : December 13, 1974 Section(s) Referred: 80G Statute: Income - Tax Act, 1961 Section 80G provides for a deduction in respect of donations made to institutions and charitable trust referred to in Section 80G(2) while computing the total income of the donors. Section 80G(5) lays down that deduction will apply to donations, inter alia, to institutions or funds which derive any income which would not be liable to inclusion in its total income under the provisions of Section 11 and 12 of the IT Act, 1961. Normally, the ITO assessing the donor should verify whether the donee satisfies requirements of Sections 11 and 12 and thereafter grant deduction in terms of Section 80G. As such procedure would involve the calling for the accounts of the donee by different income-tax officers assessing different donors who may take different stands on the benefits that are to be given to the donee, it has been administratively convenient to have Commissioner of Income-tax issue a recognition certificate under section 80G, although there is no legal sanction behind the certificate. 2. Section 80G(5) lays down that donations to institutions funds referred to in section 80G(2)(a) (iv) will qualify for relief only if the institution or fund derives any income which would not be liable to inclusion in its total income under the provisions of Section 11 and 12 or Section 10(22) or (22A) or (23). It will be seen that there is a significant omission of Section 13 altogether in this provision. Thus, if the institution satisfies the requirement of Sections 11 and 12, a certificate under Section 80G has to be granted. Such certificates cannot be refused by virtue only of any portion of the icome of the instituion becoming liable to tax by the mischief of Section 13. This general position in law is given express statement by clause (ii) to explanation 2. Thus, it would appear that where trust is otherwise exempt, under Section 11 and 12 a certificate granted to it by the Commissioner of Income-tax cannot be withdrawn or refused subsequently only because a portion of such income of the trust has become liable for assessment in terms of Section 13. Again, in the hands of the donor in such cases where a portion of the income of trust becomes liable to tax by virtue of operation of Section 13(2)(h), relief u/s 80G cannot be refused if the income liable to tax does not exceed 5 per cent of the capital of the concern in which the investment is made. 3. These instructions may kindly be brought to the notice of all officers working under each charge.